- US total vehicle sales climbed to an annualized 13.1 million units in June, after 8.7 million units in May; sales were around 17 million in 2019.
- Spanish unemployment change was expected to fall by 113,000, but it climbed by 5,100.
Three-month base metals prices on the London Metal Exchange were mixed this morning. Copper once again led on the upside with a 0.7% gain and was recently quoted at $6,100 per tonne, while zinc was up by 0.4% at $2,055 and aluminium was down by 0.5% at $1,616.50 per tonne - the rest were little changed.
The most-traded base metals contracts on the Shanghai Futures Exchange were also mixed this morning with August copper up by 0.5% at 49,360 yuan ($6,983) per tonne and August lead down by 0.5%. October nickel was up by 0.3%, while the rest were little changed.
Spot gold prices were down by 0.1% this morning at $1,767.55 per tonne, this after setting a fresh multi-year high on Wednesday at $1,789.20 per oz. Silver breached resistance on Wednesday, setting a fresh post-March high at $18.44 per oz, but closed back within its former sideways range and was recently quoted at $17.92 per oz.
Platinum ($826.50 per oz) and palladium ($1,920.10 per oz) were holding within their sideways trading patterns this morning. The rebound in US vehicles sales is encouraging, but there is still a long way to go before sales reach more normal levels. In the first half of the year, sales averaged an annual rate of 12.56 million units, down from 16.96 million units in the same period last year.
The yield on US 10-year treasuries was at 0.67% this morning, compared with 0.68% at a similar time on Wednesday, but up from Tuesday’s low of around 0.63%.
Asian-Pacific equities were stronger this morning: the ASX 200 (+1.66%), the CSI 300 (+2.07%), the Nikkei (+0.11%), the Kospi (+1.36%) and the Hang Seng (2.22%). US equities in the second quarter put in their best performance since 1998 - hard to believe given all the socio-economic damage that the pandemic has caused.
The US dollar index was weaker this morning; it was recently quoted at 96.97, this after 97.36 at a similar time on Wednesday. We have been wondering whether the recent consolidation was mapping out a half-way bearish flag on the charts, we may be about to find out.
With the dollar weaker, the other major currencies were firmer: sterling (1.2497), the Australian dollar (0.6923), the euro (1.1283) and the yen (107.49).
Thursday’s economic agenda is busy. Data out already shows Japan’s monetary base climbed 6% in June, compared to a 3.9% climb in May, and Spanish unemployment, as highlighted above, was disappointing.
Data out later includes unemployment data in Italy and the European Union, there is data on EU producer prices, with the main focus then on the US employment report, which is coming out a day early because tomorrow is a US public holiday. There is also US data on factory orders, the trade balance and natural gas storage.
Today’s key themes and views
Copper is trending higher and has got to within $225 per tonne of its January high ($6,343 per tonne). The rest of the base metals are range-trading near recent highs but lack the momentum that copper has. Concerns about the potential for copper supply disruptions in Chile seem to be singling copper out.
While we see the potential for greater supply disruptions should Covid-19 directly affect more producers, we still feel the demand damage has been overlooked by the market. The fact US vehicle sales were down by 26% in the first half of the year, with June’s sales still down by 24% year on year, gives an idea of what the demand hit has been. As such, we would be wary about whether the market can hold on to recent gains.
Gold prices pulled back on Wednesday before spot prices reached the $1,800-per-oz level, but dips do seem to be attracting buying.